When the VIX Spikes: What History Says — November 6, 2026

Dan Fitzpatrick · Recorded Friday, Nov 6, with the market still open. The VIX study covers every one-day VIX jump of 35% or more since 2003 (27 events). Returns are SPY, close to close, measured from the close on the spike day.

1. Big Picture: Thursday Looks Like the First Crack

Thursday was the kind of day that only happens when big money is positioned the wrong way. The VIX closed Wednesday at 16.61 and ran to about 28, roughly 69% higher in a single session and its highest level in seven months. CNN’s Fear & Greed Index was at 19 on Thursday and 20 on Friday: extreme fear.

• A one-day drop like this is significant. A 3.5%–4.5% move in a major average is a big deal. At 5%, it’s front-page news.
• But the indexes weren’t stretched. The S&P was barely off its high. The Nasdaq-100, 14% off its high, is technically still within the “buy zone” that O’Neill, Minervini and others point to: stocks within about 15% of their 52-week highs. Looked at in isolation, those numbers describe a solid market.
• Dan’s read: with the indexes that close to their highs, Thursday looks like the first crack, not the washout. He thinks there’s more damage to come.

2. The VIX Is the Fear Index

• It measures money, not opinions. The VIX isn’t a survey. It reflects how money is flowing: puts being bought, shorting, index selling.
• It feeds on itself. People sell, the VIX goes up. People see the VIX go up, and more people sell.
• Intraday, the VIX and the S&P are mirror images. On a 5-minute chart of Thursday, the S&P made its low at the same moment the VIX made its high, and every bounce in one lined up with a dip in the other.
• The trading rule: in a fast market, keep the VIX up on your screen. When the VIX is rising, don’t be buying. When it’s falling, complacency is returning and prices tend to rise.

3. Bottoms Are Events, Tops Are Processes

• A bottom is an event. It tends to be V-shaped: a big downdraft into a moving average, a volume spike, then a sharp move the other way the next day. You can trade the probabilities: buy with a stop just under that last low, with volume confirming.
• A top is a process. Hope springs eternal. The stock breaks the 50-day, recovers it, finds “support,” gets a pop on earnings, gets a 50-day crossover, and buyers keep coming in. All of it can be one big mass of selling. The AI data-center and storage stocks have been in that process all along; one of the charts Dan showed is now down 67% from its high.
• The channel pattern Dan has covered for years: when an uptrending stock breaks out above its rising resistance on volume, the typical outcome is that it falls back into the channel, comes back to test the top of the channel, fails, and then sells off hard. The breakout looks bullish at the time. It’s really closer to a buying climax.

4. Friday’s Bounce: Not a Selling Climax

• What a selling climax looks like: the next morning, most stocks are up a lot. That wasn’t the case Friday. Some were up, but most weren’t.
• SPY vs. RSP is a red flag. SPY was up, but RSP, the equal-weight S&P, was barely up. The biggest stocks were carrying the index while most stocks weren’t participating.
• Measure from the morning high, not the open. The morning high is the maximum power of the bulls. NVIDIA gapped up, ran higher, and then gave back almost 4% from that high, not just the 2% from the open.
• The indexes: SPY closed Thursday down almost 4.5% and was up less than 1% Friday. QQQ was up about 1.7% but holding in the middle of a wide range, like a non-committal doji. “This is not a climax low. This is just a nasty low.”

5. Active Trade List Check-In

Why keep a closed trade on the radar: you’ll often exit a trade for good reasons and then it keeps running, and you never see it because it’s off your screen.

6. History Says: Don’t Sell Into the Spike

Across all 27 spikes, SPY was usually higher afterward, and the odds improved the longer you held. Six months out, there’s a 92% chance this time is not different.

• This doesn’t mean ignoring your stops. “Don’t sell into the spike” is about panic selling at the lows. Stops set at higher levels before the spike are doing exactly their job when they’re hit.
• The catch: the low often isn’t in yet. SPY typically fell another 2.2% in the month after the spike. 9 of 27 spikes saw another drop of 5% or more before the real bounce, and 4 of 27 saw 10% or more.
• A VIX spike tells you fear is high. It does not tell you the selling is over. Roughly one time in three, the market went meaningfully lower first. We’re headed for the clearing, but we still have to get through some brush.

7. Two Kinds of VIX Spikes

What separated the good outcomes from the bad ones was where the market was when the spike hit. “Further drop” is the maximum drop over the next three months, measured from the spike-day close.

The First Crack: Spike Came Near the Highs

After the Damage: Spike Came After a Big Decline

The pattern: first cracks brought bigger further drops and weaker or negative returns, while washouts brought smaller further drops and strong returns. Three of the four first cracks were lower three months later. All four washouts were higher.

8. August 2015: Both Kinds of Spike in One Weekend

Aug 21 and Aug 24, 2015 are the Friday and the Monday of the same selloff, and they show why the second spike was the better entry.

• Friday, Aug 21 (the first crack): the market cracked from near its highs and the VIX jumped 46%. SPY closed near $198.
• Monday, Aug 24 (the washout): Chinese stocks crashed over the weekend. SPY plunged to about $182 in the opening chaos, the low of the next three months, and closed near $189.50. The VIX jumped another 45% and hit 53 intraday.
• Buying Friday meant sitting through a 7.8% hit on Monday morning before still finishing up 5.4% three months later.
• Buying Monday, after the washout, meant only a 1.4% further dip and a 10.5% gain three months later.

9. Today’s Closest Analogs

Dan’s read: October 2018 is the one he sees playing out. He thinks that pattern is more common and the better bet here.

10. Why Traders Sell at the Bottom

• Too many positions. Traders add a stock, then another, then another, until they hold a bunch of positions, none doing great and none flashing a sell signal. Then a day like Thursday comes, everything goes down, and they don’t know what to do. They hang on and hang on, and sell right at the bottom.
• That’s what creates a bottom. “Lows are created when the last of the most stubborn bulls finally give up.”
• Verify, then trust. The last bulls trust all the way down until there’s nothing left to verify, and then they sell. Profitable traders don’t trust the market. They trust their own risk management rules. Their stops are set, and as long as the stops aren’t hit and the stocks are acting as expected, that’s the verification.
• Dan has made this mistake twice. The first time blew him out of the market for a while. The second time he lost less, but it felt worse, because he hadn’t learned the lesson the first time. Getting knocked down by Mike Tyson once is a lesson. Climbing back into the ring with him is on you. It never happened a third time. If it’s happened to you, don’t let it happen again; if it hasn’t, learn from Dan’s experience and use good risk management.

11. The Rubber Band

• On the way up, the further the market rises above its midline, the tighter the rubber band stretches. Eventually it contracts, usually little by little rather than in one snap. That’s the topping process. It took a lot of buyers to get prices up there, and once you’ve bought, you’re no longer a buyer. You’re a cheerleader, with no more power over the price.
• On the way down, the band has been stretching for several weeks, and Thursday stretched it tight.
• But not tight enough for a full snapback. With the indexes still close to their highs, the band wasn’t stretched that far to begin with. Instead of a momentum snapback, expect a pressure release: it comes back a little, sellers step in, and it stalls. That’s what Friday looks like.

12. Going Into Monday

• What catalyst could change things over the weekend? You never know what the catalysts will be, or they wouldn’t be catalysts. A possible end to the Iran war might help, but a lot more than the price of oil is hitting the market.
• Dan’s expectation: the rubber band comes back a bit more Monday, then sellers cap the gains. There isn’t enough buying pressure yet to soak up all the supply and keep running higher.
• Lower prices are good news if you’re in cash. The lower we go, the sooner the rebuilding process can start. “Every day that the market goes down and you are in cash is a day that you outperform the S&P.”
• Be patient. The topping process has made it very hard to make money. The strategy that’s worked best over the last few months is profit protection: prevent defense, not throwing the long bombs. Wanting to “be there already” is natural, but the market gets there on its own schedule.

13. Key Takeaways

1. Watch the VIX intraday. When it’s rising, don’t buy. It moves as a mirror image of the S&P.
2. Don’t sell into the spike, but let your stops work. History favors higher prices a month out about 4 times in 5, and 92% of the time six months out.
3. A VIX spike measures fear, not the bottom. About one time in three, the market went meaningfully lower first.
4. Where the spike happens matters most. Spikes after a big decline usually marked the low. Spikes near the highs were sometimes only the start. Thursday was a first crack.
5. The second spike is often the better entry. August 2015 is the clearest example: Friday was the crack, Monday was the washout.
6. Friday’s bounce isn’t convincing. Most stocks weren’t up much, the equal-weight S&P lagged, and the indexes held mid-range.
7. Verify, then trust. Trust your risk management rules, not the market. That’s what keeps you from being one of the last bulls to give up.

Let Dan know if lessons like this are helpful: post in the Trading Room or email dan@stockmarketmentor.com. And thanks to everyone who bought 7 Deadly Trading Mistakes. Kindle copies are out; Amazon is running behind on hardcover and paperback shipments. Once you’ve read it, Dan would like to hear what you thought.

How we measured this: every day since 2003 when the VIX closed up 35% or more from the prior close. “Further drop” is SPY’s lowest low after the spike versus the spike-day close. SPY prices from Massive; VIX history from Cboe data. Past results don’t guarantee future performance. These are examples, not directives. Set your stops based on your own account and risk tolerance.